Pattie Lovett-Reid: How post-secondary students can reduce their debt load

Pattie Lovett-Reid: Managing post-secondary education costs

Students are just a few weeks away from heading back to school, and for those embarking on a post-secondary education, the costs can be staggering.

While we regularly discuss the importance of saving early – and often through a Registered Education Savings Plan (RESP) – the reality is many parents are struggling already with their day-to-day expenses, high debt levels and saving for their own retirement, leaving many children to go it alone.

It is important to sit down as a family and assess the financial reality of assistance for a post-secondary education with the ultimate goal of reducing the debt burden upon graduation.

Here are a few ideas for students to consider – other than turning to the Bank of Mom and Dad.

1. Think long and hard about the courses and degree you are undertaking. Getting it wrong for even just one year can set you back thousands of dollars. Understand the full costs and assess the risk return trade from the program you are taking. In other words, how much is the degree going to cost you and will you be entering an industry with growth potential? Take the time to discover what you are good at, what you love to do and how you can make money doing it. Don’t waste money embarking on a program that isn’t aligned to who you are.

2. You may have to apply for a student loan. This is not free money and a very expensive way to pay for your education. The risk is in borrowing more than you need. All too often students have not one, but two or three loans, and when asked what they spent all the money on – spring break is a popular response. Take time to understand the meaning of the word “debt,” how the student loan works, and recognize that while you are in school, you don’t have to make payments on your loans. But remember, once you leave school, the interest clock begins to tick. Your first payment is typically six months after you graduate.

3. Apply for grants, bursaries and scholarships. Before you self-eliminate by saying you aren’t the best and would never qualify, you owe it to yourself to research this thoroughly. Governments, companies and schools all offer grants and many go unclaimed. There are online tools to help you search out scholarships and financial rewards. Plus, there are many training programs that have Apprenticeship Incentive Grants. This is basically free money.

4. Get a job. Even if parents are comfortable paying for a post-secondary education, that doesn’t mean their children shouldn’t have some skin in the game.

5. Create a budget. All financial institutions have budget calculators. Budgets work. Students needs to know where their money is coming from, what it is they are spending it on, and look for ways to reduce the amount of debt they graduate with. Students discounts and special rates are a classic way of saving on costs.

The reality is many students graduate with debt, but often more debt than they need to. Students need to appreciate they can’t ignore the pile of debt they accumulate because the day will come when it has to be paid back.

Graduating with as little debt as possible, and understanding and managing your financial situation through this critical period could be the best learning experience of all.